What is Going to Happen to Calgary Real Estate Prices in View of the Events in Japan?

Sometimes the most wonderful things happen to me, like what
happened today. I was surfing Calgary Real Estate News articles around the web,
when I happened to stumble upon a LIVE web chat involving Mr. Don
Campbell (who I love, love, love!). Although I did submit a comment for
moderation, which implored Mr. Campbell to please be my BFF, my comment was not
posted. But I did have a carnival of a good time reading Mr. Campbell's
responses to some excellent questions that buyers of Calgary Real Estate are
dying to know! As I have mentioned before, I would consider Mr. Campbell to be the authority on Real Estate Investing
in Calgary and indeed in all of Canada. So here---for your viewing
pleasure---are some excerpts from the lively and informative author of Real Estate Investment in Canada, Mr.
Don Campbell.

(This post has been
copied exactly in its original format. Please excuse spelling and grammar
errors on the author's part, as this is a chat room-type forum. I have made
edits only where it was absolutely necessary to understand a thought.)

[Comment From Canadian Investor: ]How do you
think the terrible events in Japan are going to affect our real estate market
here?

Don
R Campbell:That leads
to a long and convoluted answer as we cannot take just the Japanese situation
in a bubble on it's own. As Canadians we must also combine it with what is
going on in Middle East, Soon to be Africa and the debt crisis that is floating
under the radar in Europe. So... Obviously we are not immune to what goes on in
the world... we do need to be realistic about that. However, This is Canada's
time to shine. We have what the world will be needing (or already needs) The 3
F's (now becoming the 4 F's after the devastation in Japan). Food, Fuel,
Fertilizer & now Forestry. There is NO other stable country in the world
that can provide all of these at a continually increasing rate. That is why you
have been witnessing the dramatic upswing in foreign money pouring into Canada.
Not just our bonds and equities as we read in the Globe today, but also our
Energy companies. Right now stable sources are few and far between. This demand
is not a blip â€“ sure it won't be straight line growth â€“ but demand over the
next decade will be increasing, with shrinking supply.

What this
means to homeowners property? Jobs are going to be created in regions that
provide these resources. And if jobs are being created, people will move there
and if they move there they will increase rental demand, reducing vacancies etc
etc. The simplified formula is: GDP growth = brings Job growth = brings
Population growth = Increased rental demand (12 months later) = Increased rents
= Property purchase demand and (18 months later) = leads to property price
increases.

However,
don't think that real estate markets are goin gto give clear signals for the
next 18 months. No Way. You will hear people screaming that it is going to
collapse, you'll hear people saying that it is going to be fine... the messages
will be very mixed. Because of the ongoing and progressing situations around
the world.

But it is
important to get back to the foundation. (remember people scream to be heard,
not to inform).

Katherine
Scarrow:
Don -- this next reader is wondering about nuclear issues and power shortages in
Japan.

[Comment
From Chris Davies: ]
Do you think the nuclear issues in Japan will increase interest in shale gas plays in
Northern BC?

Don
R Campbell:
LNG (liquified natural gas) demand will have to increase. There is no question about
it. The electricity will have to come from somewhere and that somewhere in the
sort term will be coal and natural gas. Right now there is a glut of gas on the
market. Northern BC is unique for 'Shale Gas" only in the fact that it is
not surrounded by millions of people. (like it is in Eastern US). This will
bring jobs and prosperity to NE BC and NW Alberta

[Comment
From kriskris: ] Do you
think that the events in Japan will have a major impact on demand for SK
Uranium?

Don
R Campbell: Always
keep in mind, throughout the decade: The 3 F's (now becoming the 4 F's after
the devastation in Japan). Food, Fuel, Fertilizer & now Forestry. Interesting
question. Are we speaking of the 'northern Sask real estate market or the
commodity itself.

[Comment
From kriskris: ]Well,
both! Decrease in Uranium (major one) would equal a decrease in rental demand
in northern/central SK would it not?

Don
R Campbell:Nice use
of the formula! Short term, lots of talk about shutting power plants, however,
long term (next 5 years) alternatives wn't be able to be put on-line fast
enough to replace it. Remember we are supposed to be entering the time of
"Electric cars' and that 'fuel' has to come from somewhere (and Ontario is
shutting their coal power plants) Demand will be there for a decade.

Don
R Campbell: New Rules:
Important to remember that these rules are only "rules" for any mortgage that
has less than 20% equity (down). These rules do not affect conventional
mortgages (the majority of mortgage in Canada). Also, the rules for borrowers
are still better now than they were five years ago. Here are their new rules
Another round of strategic rule changes from Ottawa, specifically targeting the
biggest areas of concern: 1. Mortgage amortization periods will be reduced from
35 years to 30 years. 2. The maximum amount Canadians can borrow to refinance
their mortgages will be lowered from 90 per cent to 85% of the value of their
homes. 3. The government will withdraw its insurance backing on lines of credit
secured on homes such as HELOCs. Now one thing to understand is that the majority
of secondary lenders, the MBS-non bank lenders, use these rules for their
conventional mortgages as well. Obviously we are not immune to what goes on in
the world... we do need to be realistic about that. However, This is Canada's
time to shine. We have what the world will be needing (or already needs) The 3
F's (now becoming the 4 F's after the devastation in Japan). Food, Fuel,
Fertilizer & now Forestry. There is NO other stable country in the world
that can provide all of these at a continually increasing rate. That is why you
have been witnessing the dramatic upswing in foreign money pouring into Canada.